A growing number of companies are devoting significant resources to proactively stewarding their environmental impact, including committing resources to the voluntary carbon credit market. But why? There are several key considerations:
Attracting new customers
Hiring/retaining employees
Qualifying for more capital
Anticipating regulatory changes
Strong internal desire to address sustainability issues
More and more consumers value products and companies that have sustainability-related goals. A recent McKinsey study on consumer sentiment in the US observed that when consumers are asked if they care about buying environmentally and ethically sustainable products, the majority of participants said yes. [1] Another recent study by NielsenIQ found that 78% of the US consumers say that a sustainable lifestyle is important to them. [2] There is a growing interest with consumers about prioritizing environmental values when making purchasing decisions.
An increasing number of people want to work at companies that value sustainability. A recent survey by IBM describes this growing interest showing many employees wanting to apply for and accepting jobs from environmentally sustainable companies. “67% of the respondents reported that they are more willing to apply for, and 68% more willing to accept positions from such companies.”[3] Conversely, the study identified turnover risk by reporting only 21% of respondents consider their current employer to be sustainable.
Additional capital is being given to companies that have a sustainability focus. When clearly defined KPIs (key performance indicators) track success towards sustainably goals, additional funding may be available through the following funding mechanisms: sustainability-focused private equity funds, venture capital firms, sustainability-linked loans (SLLs), green bonds, impact investment funds, multilateral grants from foundations, corporate venture capital, sustainable infrastructure funds, traditional public credit, and non-dilutive grants at both the federal and state levels.
Many companies anticipate that they are going to be required to offset or reduce their emissions. Instead of reactively engaging with changing governmental policies, companies are trying to get ahead of the curve for potential regulations within both the compliance and voluntary markets. Proactive companies are offsetting their emissions, which, in turn, creates greater awareness of the cost of emissions, drives behavioral change within the business accordingly, and prepares the organization for a smooth transition into compliance with future regulations.
Lastly, some companies are leading the way in these efforts simply because they have strong conviction that it is the right thing to do. Many of these companies believe a core value of their company is to be environmentally conscious and minimize their business’s negative impact on the environment. Whether privately held by an individual or family who shares these values (e.g., Patagonia) or publicly held and led by management and/or core investors (e.g., Nestlé), companies are managing their impact by proactively offsetting their emissions in the voluntary carbon market.
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Ultimately, a company's impact matters more than the motivation that spurred it. And many companies are creating positive environmental impact while simultaneously benefiting the business’s bottom line. By aligning brand with growing consumer demand for sustainable products and services, companies are growing revenue and increasing customer retention. By standing behind sustainability values in the workplace, companies are attracting and retaining talent, creating a unique competitive advantage in human capital. The ability to attract additional sources of funding provides greater flexibility and resiliency in the face of headwinds. And preparing for future regulatory changes is ensuring that innovative companies are not left flat footed in a changing world.
If you or your company are interested in developing a proactive sustainability strategy, that is simple and rooted in sensible fundamentals, please send us an email at Sky Harvest. We would love to help you.
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[2] NielsenIQ Global Health & Wellness Study of 17 markets, September 2021, US results; NielsenIQ Omnibus Survey, Dec 2021
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